Correlation Between Steel Authority and Max Financial
Can any of the company-specific risk be diversified away by investing in both Steel Authority and Max Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steel Authority and Max Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Authority of and Max Financial Services, you can compare the effects of market volatilities on Steel Authority and Max Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steel Authority with a short position of Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and Max Financial.
Diversification Opportunities for Steel Authority and Max Financial
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Max is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Max Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Financial Services and Steel Authority is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steel Authority of are associated (or correlated) with Max Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Financial Services has no effect on the direction of Steel Authority i.e., Steel Authority and Max Financial go up and down completely randomly.
Pair Corralation between Steel Authority and Max Financial
Assuming the 90 days trading horizon Steel Authority of is expected to generate 1.25 times more return on investment than Max Financial. However, Steel Authority is 1.25 times more volatile than Max Financial Services. It trades about 0.08 of its potential returns per unit of risk. Max Financial Services is currently generating about -0.3 per unit of risk. If you would invest 11,390 in Steel Authority of on September 3, 2024 and sell it today you would earn a total of 321.00 from holding Steel Authority of or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Steel Authority of vs. Max Financial Services
Performance |
| Timeline |
| Steel Authority |
| Max Financial Services |
Steel Authority and Max Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Authority and Max Financial
The main advantage of trading using opposite Steel Authority and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, Max Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Max Financial will offset losses from the drop in Max Financial's long position.| Steel Authority vs. Tamilnadu Telecommunication Limited | Steel Authority vs. JGCHEMICALS LIMITED | Steel Authority vs. Global Education Limited | Steel Authority vs. Paramount Communications Limited |
| Max Financial vs. Reliance Industries Limited | Max Financial vs. Shipping | Max Financial vs. Indo Borax Chemicals | Max Financial vs. Kingfa Science Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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